Applied Predictive Technologies (APT)'s new report “Brick-and-Mortar Retailers Fight Back: Winning Strategies to Compete with Online-Only Players” is based on findings from a survey of global retail executives. The report, which incorporates research and analysis from The Economist Intelligence Unit, is available here: http://www2.predictivetechnologies.com/retail/brick-mortar-retailers-fight-back
“E-commerce has taken on its toll on traditional retailers and, as our survey reveals, six out of ten respondents have closed stores in the past three years as a result of online-only competition,” said Pete Swabey, editorial director, EMEA Thought Leadership, The Economist Intelligence Unit. “But the survey also reveals the strategies that retailers are adopting to fight back. These include increasing their product selection, reducing prices, and expanding loyalty programs to better understand customer behavior. They are also emphasizing the unique strengths of the in-store shopping experience, in particular through an increased focus on staff training.”
The rise of online-only competition has hurt traditional retailers; in fact, 60 percent of retailers globally have shuttered stores in the past three years as a result of this competition.
However, the report shows that retailers are fighting back. Traditional brick-and-mortar retailers are combating the growing competitive incursion of online-only players through strategies such as:
- Increasing online investment: Traditional retailers are facing online competition head-on, with three-quarters of respondents (75 percent) reporting that they have increased their investment in online channels
- Empowering employees: The most common in-store response to online competition is to train employees to be more knowledgeable, with 70 percent of respondents having done so. Almost as popular is training them to be more customer service-focused (58 percent)
- Growing product selection: The majority of retailers have responded to the infinite inventory of the internet by expanding their product selection: 68 percent have grown their in-store assortment
- Introducing loyalty programs: In a bid to deepen their customer insight, more than half of respondents (54 percent) have introduced loyalty programs, and 24 percent plan to do so in the future
- Lowering prices: In response to price pressure from online-only rivals, 44 percent of respondents have cut prices, and 12 percent plan to do so in the coming years. Among the retailers who have closed stores but successfully recouped revenue, almost three-quarters (72 percent) implemented price cuts
APT proposes four key strategies that brick-and-mortar retailers should adopt in the face of e-commerce competition:
- Make your store associates core to the in-store experience
- Use customer insights to drive incremental profits, not just offer promotions
- Take a surgical approach to store closures and remodels
- Focus on measuring everything across channels
“In such a competitive environment, it is critical that brick-and-mortar retailers not just adapt, but adapt smartly,” said Jonathan Marek, senior vice president, APT. “This report contains valuable information for all retail executives, breaking down the threat of e-commerce both globally and in the U.S., as well as which responses have proven most effective for retailers combating these competitive pressures.
"With so many initiatives to try across so many different areas of the business, those that can most quickly and effectively implement winning ideas will be the victors in the age of e-commerce," continued Marek. "While there are many methods retailers can use to inform decision-making, in particular, findings show that among the respondents that leverage scientific testing to evaluate new ideas, 60 percent have either not closed stores as a result of online competition, or have recouped more than half of sales lost from store closures.”